How to Convert Annual Interest Rate to Daily Interest Rate

Interest rates increase the total repayment amount of a loan at a fixed or variable rate. Interest rates are often expressed as an annual percentage, even though interest is often accrued monthly, weekly or daily. Knowing how to convert annual interest rates to daily interest rates can shed light on exactly how much interest is accrued each day.

Determine your annual interest rate. Look for the interest rate in your original loan documentation if you're on a fixed rate. Alternatively, check your most recent interest-rate change notification letter from your lender if you have a variable rate.

Divide your annual interest rate by 12 to find your monthly interest rate. For example, if your annual interest rate is 10 percent, your monthly interest rate is about 0.8 percent, or 0.008.

Divide your monthly interest rate by 4 to find your weekly interest rate. To continue the example, if your monthly interest rate is 0.8 percent, your weekly rate will come in around 0.2 percent, or 0.002.

Divide your weekly interest rate by 7 to find your daily interest rate. Continuing the example, if your annual rate of 10 percent translates into a weekly rate of 0.2 percent, your daily interest rate will be around 0.02 percent, or 0.0002.

Multiply the total loan amount outstanding for the period by that period's interest rate to determine the amount of interest accrued on a given day, week or month.


  • If you don't want to examine your monthly and weekly interest rates, simply divide your annual interest rate by 365 to arrive at your daily rate.

About the Author

David Ingram has written for multiple publications since 2009, including "The Houston Chronicle" and online at As a small-business owner, Ingram regularly confronts modern issues in management, marketing, finance and business law. He has earned a Bachelor of Arts in management from Walsh University.